Technology affords us new ways of doing business, but some business needs remain the same. However, when businesses start scaling up, so are the demands for an accurate account of the complicating financial accounts. This is where cloud bookkeeping solutions enter.
A study done by Computerworld showed that 42% of IT decision makers intend to raise spending on cloud computing in 2015, while Saugatuck Technology expects that over 60% of enterprises will have half or more of their infrastructure on cloud based software. It is clear then, that businesses would be wise to adopt cloud bookkeeping. But what exactly is it and how does it work?
Cloud accounting software refers to web-based software used for accounting. The software is stored on a remote server in a secure location. Data that you input is stored in a cloud which the user may access any time on multiple devices – whether it be through a desktop or a mobile device – for so long as there is internet connection. This is suitable for small business owners as it allows them to update their accounts anywhere, especially if they have employees in other branches. This also means that a software will no longer have to be maintained in just one device accessible only to one person.
Depending on your local business code, there are some requirements that must be met other than setting up the software itself. For instance, the HM Revenue & Customs requires that all the records and documents must be kept to complete a return or else they will be subject to penalties. Companies are also to keep records for about six years and update them regularly.
Other considerations for using a cloud-based bookkeeping software include the need to have stable internet connection. Businesses that will adopt this ought to ensure that their internet service provider meets the minimum internet speed needed for the software.
There are many cloud bookkeeping software that you can use, each with their own set of features that may best cater to the unique needs of your business. Some of them include FreshBooks, QuickBooks, Kashoo, Outright and Xero. Before you make a final decision on which one you are going to use, aside from looking up the software’s features, it is best to try a free trial version to be assured that it best fits your needs.
Another thing to note are data conversions which is important if you will be using multiple devices. The software to be used must have a data conversion function. Hidden costs and whether the software runs through your preferred devices must also be considered as well.
Here are a few more reasons why cloud bookkeeping is advisable especially for small business owners:
Traditional accounting software costs a large initial cash outflow just to get started and the payment is done all at once. Cloud accounting, however, is just a monthly subscription service with a corresponding monthly fee that is much lesser than that for traditional accounting and worth all the benefits it has. It also does not need an IT staff to maintain and update it which translates to savings compared to traditional accounting software that incurs more expenses from software licenses, maintenance costs and fees for database and systems management. This is perfect for small business owners who may be constrained by a tight source of funds.
Cloud bookkeeping applications allow you to input and access your data entries in real-time, making them highly suitable for those who are always on the go. Because the data you entered on one device is the same one you can read from a different device, the hassle of double entry and human error are avoided. Account data may also be shared with other accountants or bookkeepers which make collaboration and consultations much easier. Sharing data is now done by sharing passwords instead of through flash drives which may be lost or stolen. Real-time access to data enables accurate and timely financial decision-making.
Cloud bookkeeping is more secure than traditional accounting software. The applications for cloud bookkeeping meet ISO 27001 requirements – the International Standard for Data Security. One of the requirements is that the data entered and transferred through them are encrypted and password protected. Firewalls are also included. You can also be assured that your data is protected because unlike traditional accounting software where the central hub is the hardware, the data is on multi-site servers. This means that your data is backed up regularly in case the main data centre goes down. This also means that your data is protected even with the loss of one of the devices used for data entry.
4. Convenience in handling multiple-currency transactions.
Especially if a business is handling transactions involving different currencies, the add-ons in some cloud bookkeeping softwares are very useful. The add-ons allow for exchange rates being used to be up to date and saves you time in converting the data.
5. Integration with other services.
Multiple currency transactions were already covered but there are other services that are integrated in cloud accounting solutions. Some of these include an integration of Dropbox that allows for file storage and sharing. It can be also be integrated with other add-ons or softwares depending on your needs.
6. Long-Term Savings.
Traditional software needs extra payment for additional computers that will be installed with the program. If a device with the program breaks down, the program will have to be reinstalled again and would incur another payment. Updating traditional software is taxing as update patches involve a lot of management, expertise and the right configuration for your computer. If your update patch is not fit for your computer, you have to wait for when it will be available. With cloud bookkeeping, however, this is not the case as the updates, being under the control of the software company have the same configuration and can be done incrementally depending on the demand on the servers.
In summary, cloud bookkeeping solutions are sufficient, cost-effective, scalable and secure. As more and more companies are making the shift towards it, there is no reason why you should not, as well. Get started by finding the right cloud service for you.